We are planning to move to Texas in 2017. We plan on withdrawing from my wife's pension after we have moved, perhaps in 2018. Would we have to pay state income tax per the location of the employer (Missouri)? Or would we avoid state income tax because of our Texas residence at the time of the withdrawal?

The location of the employer won't matter, just your state of legal residence when you draw the pension. Federal law (Pension Source Tax Act of 1996) says basically that states can only tax pensions of their own residents.

DetroitRick wrote:The location of the employer won't matter, just your state of legal residence when you draw the pension. Federal law (Pension Source Tax Act of 1996) says basically that states can only tax pensions of their own residents.

Make sure that you sever all ties with the taxing state. There are plenty of threads about a former residence state pursuing people who relocate. States want to continue to tax when they think you are temporarily gone and plan to return (because you still have a house there, for example.)